The Economist explains

Why rare stamps have become so valuable

ON JUNE 17th the British Guiana One-Cent Magenta stamp, the only surviving example of a penny issue printed in the South American British colony in 1856, will go under the hammer at Sotheby’s, a large auction house, in New York. Each of the three times it has previously been sold at auction it has set a new record for a single stamp, and the expectation this time is that it will do so again by a very wide margin. Pre-auction estimates are that it will fetch in the region of $20m, almost ten times as much as the price achieved by the current record-holder, the Treskilling Yellow, in 1996. That would make it the most valuable human artefact (by weight) ever sold, says the auction house. Why have prices for very rare stamps risen so high?

The broad reason is that number of extremely wealthy people in the world has soared in recent years. The Hurun Global Rich List, published in February, counted 1,867 dollar-billionaires, an increase of 414 on the previous year. That means ever higher premiums are paid for the most covetable items over those that are merely good—from world-famous works of art, to the finest wines, to one-of-a-kind stamps. One estimate suggests that really rare stamps have risen in value by 11% annually for the past four decades; meanwhile the value of good-but-not-extraordinary collections has slumped.

The rise of China has also boosted the value of rare objects. There are now more than 300 Chinese dollar-billionaires, an increase of a quarter on the previous year. And they really like collectibles: a recent study by the private-wealth division at Barclays found that very wealthy Chinese people held 17% of their assets in alternative investments, such as fine paintings and jade objets d’art, compared with 9% for America’s super-rich and 7% of Britain’s. The effect on the philately market is even more pronounced than for other collectibles. As stamp-collecting has fallen out of fashion in the West, Chinese collectors have piled in. At least a third of the world’s stamp collectors are now in China; dealers say that auctions and shows in Hong Kong and Beijing are far more lively affairs, with younger participants, than those in London and New York. Sotheby’s showed the One-Cent Magenta in Hong Kong before the auction in order to attract potential collectors.

Finally, really rare stamps often benefit not only from scarcity value but fascinating histories, too. The single surviving example of the One-Cent Magenta was found by a schoolboy in 1873; it was later sold to another local philatelist for several shillings. By the end of the 19th century it had found its way into the hands of an Austrian, Count Philippe la Renotiere von Ferrary, perhaps the greatest stamp-collector in history. His collection was seized by France as reparations after the first world war and auctioned in the 1920s. The One-Cent Magenta was then bought by Arthur Hind, an American collector, who outbid King George V of England, setting its first world-record price of $35,000. Its most recent sale, to John du Pont (heir to the DuPont chemical company fortune), was in the 1980s for just under $1m. Some speculate that Queen Elizabeth may try to bid this time around. But no one will be surprised if a British royal loses out once more—and this time, to a Chinese collector.

Oh billionaire people ,we saw them as weird why they collect something was as hobby 50 years old even if it is on expensive object .
I think we say if it was me i will buy luxury modern cars,plans,Island and so on.
But how blame them ,it is like they have mind different than ours .

Nothing has inherent value. I suppose, you could argue that there may be a certain amount of time and effort that you would need to dig something gold or silver out of the ground and that should be pari passu with the value of the object. However, these sorts of things only have value in the amount of time and effort somebody else might exchange for them. That has and will vary over time. You could argue that these things cannot be created now, and yes, there is something to that argument versus a printing press spewing fiat currency. But there is really no inherent value in much. There is only the simple question: "Can you get me a bid for that?". It is more a case of a current exchange rate than it is of anything else.

Erm... Du Pont was founded in July 1802 as a gunpowder mill by Eleuthère Irénée du Pont. So, does the Author refer to Frederick T. Du Pont as the founder in the sense he turned the powder mill into a chemicals conglomerate that produced Nylon and other chemical products?

Thanks for pointing out this mistake. The buyer was indeed the heir to the DuPont fortune rather than the founder of the company - and he was called John, not Frederick. (The author seems to have confused him with Frederick T. Small, an earlier buyer of the stamp.) Both errors have been corrected.

Actually, from their point of view, these are good sense investments - not likely to ever decrease in value regardless of the state of the economy and/or any political change, completely portable, easy to pass down to heirs, requiring of virtually no space for storage, and no management expense. Owning one stamp is probably less headache than owning a piece of real estate, and maybe even better appreciation over time.

Obviously, to make this investment decision, the buyer would have made two judgment calls: (1) This stamp is not a fake, (2) stamp collecting will not fall out of fashion for the time period he projects. Like all investment decisions, you make a bad call, you lose. Fair enough.
Liquidity is a good point. There seems to be only a handful of qualified buyers for this item. It may be hard to resell in so far as it is a purely investment item, not buying to own and view and enjoy for the satisfaction of it. But then again, even here, the buyer should not be one needful of liquidating this little thing to cover his wife's wardrobe or her husband's bordeaux. Like me buying a $1,000 (only 3 zeros) "presumed to be antique" book. I wouldn't buy it if I foresee I may have to liquidate it for next week's groceries. All is relative. Note these are all many-times billionaires.